Information Systems Mid Term o 3 Properties of an Information Good o Marginal Cost approaches 0 High initial sunk costs then cost basically nothing to reproduce value doesn t change if another person uses the o Public Goods Non Rival good Value is constant Marginal value doesn t change even if people change Non Excludable prevent someone using good or service no what they are they are included cant o Experience Goods experience it Need to asses for yourself experience good trying out something before you o Reciprocity When people respond o Killing suing o All goods are consistent of Atoms Bites o Atoms Physical Goods Beer pencil o Bits electronic goods Music to bits Newspaper Print to online Music Records to iTunes o As time goes on more and more goods are being converted from atoms o Physical goods have diseconomies of scale Electronic goods do not Electronic good is a collection of symbols Its utility depends on the arrangement not material o Value Chain Series of value enhancing activities performed by the firm better understanding costs and squeezing them out focusing on core competencies in order to perform o Firms can reconfigure value chain by either reconfiguring value chain o Value Advantage of the value adding system them better than the competition o Differentiation or reducing costs o Components InboundLogistics Operations OutboundLogistics Marketing Sales Service MARGIN o Firm Infrastructure o HR Management o Tech Development o Procurement o Maintainable Sustainable Competitive Advantage o Factors of Profit o Operational Effectivisim better than rivals perform them means performing similar activities Decrease Cost Problems o Raises bar for everyone o Increases homogeneity in an industry o Strategic Positioning rivals or performing similar activities in a different way performing different activities from Increase Revenue Way to differentiate oneself o Straddling seek to match benefits of a successful position while maintinin existing one o Tradeoffs Inconsistent with image or reputation Way new firm firghts off incumbent firm is creating fit among a companies activities continual improvement everywhere there are NO o Strategy o Operational Agenda trade offs o Variety Based o Positioning Strategies segment o Need Based specialized in services not in customer Introducing a new variety of a product specialized needs of a customer service Segmentation of the market to meet the Servicing the market based on geographies Something Not There o Access Based demographical characteristics Gluten free food Kosher Foods o Tradeoffs Image Reputation Activity Based Tradeoffs Coordination Control Tradeoffs o Find Good Fit and Positioning Then you cannot be imitated the obscure inventory that eCommerce sells and sells a lot of because o Long Tail there are lots titles but not lots of sales o Brick Mortar Stores o Only so much floor space and shelf space and therefore limit there inventory to only items that are guaranteed to sell o E Commerce o Infinite Shelf Space so can hold inventory of long tail Lure them in with the Hits Push them down the tail to more obscure inventory o Amazon Netflix Recommendation system Rules o Make everything available o Reduce price by and lower it o Be able to find it o Analog vs Digital stored o Analog Countinous over time that are discrete variables o Digital converts the analog wave into a stream of s and these s are o Takes time interval samples and stores these samples the more samples over the same time the better the quality Digitized info can be easily accessible o Information Good anything that can be digitized can be both physical and digital good o Information as an experience good o Info is hard to preview without giving away o If previews are given away even if Info is given away for free sales actually go UP o Never economies of scale with Information Goods o Costs a lot to initially produce lots of sunk costs that are high but the variable marginal cost is virtually 0 o Products have market power so they can charge higher prices o Owner is entitled to idea for a limited time Patents Copyrights Trademarks Create Monopolies dead weight losses o The lower amount of Per Capita Income the higher amount of o As countries grow more prosperous they enact stricter Pirated Goods copyright laws o Information grows exponentially while the amount of infor consumed grows linearity o 3 Properties of an Information Good o Marginal Cost approaches 0 High initial sunk costs then cost basically nothing to reproduce o Public Goods Non Rival uses the good value doesn t change if another person o Value is constant o Marginal value doesn t change even if people change Non Excludable cant prevent someone using good or service no what they are they are included o Even when they don t pay o Experience Goods before you experience it Need to asses for yourself experience good trying out something o Search Good can be quantifiable o Value Volatility commodity something that can be found that value is not set and always changes o IT Doesn t Matter o IT is paid for all but gives distinction to none o Proprietary Technology can be owned actually or effectively by a single company o Gives maintainable sustainable competitive advantage o Profits go UP o Strategic Advantage Patents Packaging Long Shelf Life o Infrastructure Technology when technology is shared ofr all to share benefits o Infrastructure Investment investing form Info Tech o Benefits is greater if shared o Railroads Power Teligraph o Fiber optic lines to all homes o Power lines to all homes o Buildout Stage when new technology explodes as use and is everyday o After the individual advantages are gone o More Competition Greater Capacity Prices DOWN o Nears completion power diminishes o Managers spend too much on IT this is wasteful o Ubiquidious o Types of Tech homogenious Community o Proprietary Possessed by few Provided advantages o Infrastructure o Commodities o Porters 5 Forces o Barriers of entry o High when easy for new competition nto enter o Low when had for competition to enter o Determinites Economies of scale Patent Protection Access to distribution Regulation Policy Expected retaliation o Bargaining power of Buyer o High when buyers have many choices of who to by from o Low when choices are low o Price Sensitive Brand Loyalty o Decreasing Buyers Power Loyalty Program Free give Away o Bargaining Power of Supplier o High when buyers have few choices of whom to buy from o Low when buyers have lots
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